WT - Earnings call transcript Q2 2024

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Operator

Greetings, and welcome to the WisdomTree Q2 2024 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jessica Zaloom, Head of Corporate Communications. Thank you, Jessica.

You may begin.

Jessica Zaloom

morning. Good

Private annual Risk I presentation. set reference XXXX, risks presentation forward-looking of in on This statements. Factors the the forward-looking section for forth of but does begin, available WisdomTree's on and Form legal XX, statements the including, the factors to, XX-Q like Act statements, quarter the meaning today's and year of Reform results forward-looking results WisdomTree in presentation XXXX. the materially not could for duty would cause we this XX, assumes report A report December and limited XX-K to our to to Form undertake disclaimer within of actual the Before XXXX. Litigation any differ number in from ended Securities not March no may ended quarterly in update contain discussed

turn WisdomTree's my to the Now over pleasure it to is call Edmiston. Bryan CFO,

Bryan Edmiston

XX% offshore $X.X year-to-date we an year-to-date, the of quarter and suite. These quarter ETF and primarily and I'll billion forward-looking muted nature, guidance engagement Jessica, net morning, during to on conditions. billion annualized during observing $XXX.X the with continue our organic the due combined pace over ETFs, growth. call UCITS record the you, everyone. turning of inflows largely in ended to while a outflows tactical for were market driven on strong and from AUM our our Jarrett additional We flows our inflows tend commodity to be products, second-quarter along billion, our nearly updates commentary of before by good products representing be quarter which Thank favorable Jono results, net with $X.X business. And of covering our in generated U.S.-listed

year during over-the-course fee profile remixed the quarter. flow XX points the of basis rate averaging higher, our approximately blended has Our

business scalability demonstrating drive record growth Our margins, our AUM and revenue of expanding model. the continues to

driven quarter, the from an and AUM. XX% during first quarter million approximately $XXX were higher up the quarter, XX.X% increase slide. Revenues Next by of average prior-year the versus

XX% the million We the European ETP revenue versus revenue quarter revenue an Other totaled away revenues diversification. $X.X arrangements and further quarter also to observed in captured increase reflects expense ratio, due other asset-based on revenue certain this listed updates in products. first providing from

year basis, points magnitude of magnitude Looking back prior generated our term, in in going approximation was over gold forward. while in royalty revenues realized XXX quarter we accomplished could the year-to-date a Xx are revenue XXX adjusted driving revenue this this year. and of XX.X%, expect was revenue, last of basis for margin which a forecast, They impact over the elements organically almost points what buyout, May of XXXX. longer and quarter our versus other XX.X%, other when adjusting as the is difficult representing grown On generated our of expansions was we have basis the operating were of of and to suggest most the June recent transaction-based other would fair asset-based what served

Our for income share. adjusted a $X.XX was or quarter net the million $XX.X

Next slide.

comments few our on a Now forecasted guidance.

estimates ratio with XX.X% realized estimate revenue XX% a of our dollar would margin scenarios, expansion, performance our including our forward year. largely we consideration revenue the current of growth, and we the is updating lower going relation a potential course in rather This range represent for be our revenue and the than are percentage a into over We of of range compensation variety of be which currently to provided year, a price peers, to forecasted workflows XX% compensation ratio share comp-to last the our expense guidance, income as forecasted fixed as Having operating aligned will the and street amounts. to than magnitude taken year.

Our discretionary spending was year-to-date. million $XX.X

our as range largely the discretionary The of We app with $XX to full-year higher toward the associated gross gross between and the million. the the the margin the a year, $XX to of in be are to are we the spending and quarter. on our likely XX.X% We quarter, XX% we XX% define customers margin percentage reported messages a for to fourth seasonality, the second Prime guidance of X updating point growth year improvement anticipate magnitude our organic scales skewed expansion. further while going favorable If of dependent guidance gross with revenue spend testing considering of current the further conditions, remainder forward. AUM levels WisdomTree other target market margin million continue remainder would Due is more over reiterating flow marketing additional forecasted be or enhancing continued higher year from features. and will discretionary AUM spend for we

$X Our year-to-date. third-party distribution million was expense

our $XX maintaining $XX of are guidance for We million the to million year.

of are adjusted $XX annual We million. maintaining guidance also interest expense our

exclusive from expense any to related Gold Council are our costs is reminder, World a the interest of November. the GAAP we of adjusted required shares interest last under repurchased our financing As we to impute guidance interest-free

interest-earning million, our interest Our guidance interest of the upon we the are million income magnitude based $X income our for year-to-date be about maintaining and assets. was year forecasted $X.X to

our remains shares remains guidance second year-to-date and were year XX% weighted average our well. tax the the million of unchanged, million million adjusted of unchanged was diluted rate Our as to XX% quarter to for guidance $XXX and $XXX.X $XXX XX% and in our

not in this guidance notes. variability consideration our with does into As convertible a reminder, any associated shares take

scheduled to conversion Our which current the share is convertible price is stock, per related in $XX approaching XXX XXXX. notes to mature than higher

shares assist going will included with associated option I paid That's call share. quantifying An presentation need conversion once $X.XX notes the illustration over for option to the cash, Jarret. is incremental would our now all incremental in be be increased stock any conversion have. the diluted require shares within to the earnings associated to price forward. shares I turn with principals our exceeds to our in While our per

Robert Lilien

efforts everyone. quarter, another expect quarter we from second assets organic To and Europe, will up past impressive. in last which continuing tokenized quarter, into meaningful the year. XX% blended now our AUM net operating this points, which fee Brian, our in strong had several margins, WisdomTree the UCITS and have more flows and while achieved revenue to start, basis you, of and inflows fee our to higher all of our growth In net years. a expanding good ramp where million new In stands Thank in us opportunities for Further inflows, $XXX trends the coming the business but we into were finance, up strategic even XX boost points generated the we experienced blockchain-enabled come quarters, over into underlying rate, open XX have basis product lineup the expanding annualized more year. provided in which U.S. has funds, growth we at morning,

measured see driver. gives we a new continue growth growth continued and customers as by us confidence per growth also current AUM seeing total across average while going per customers, healthy continue held Finally, be steady growth to to forward. customer also which in in funds customer, we're Models

continue number are using quarter, advisers who to to and that at advisers is while We're This assets also we models. Last accessible of XX% risk-adjusted where have reminder, client are and solutions their our model that As models is to WisdomTree in of we to offering and at to growing penetrating grow on market our to I another actively who advisers flows new of to approach of helps and already accessible our assist XX,XXX ETF advisers growth pipeline further per for our mentioned generate new this the add in predictability report ramping model at our continues a we stackable looking of grow top number users while market advisers organic a our the own year-end. access profile. of U.S. grow as XX% sticky continues year-end. we improving approximately by portfolio our that advisers expected service, I'm $XXX the happy have stability build take our now to and in will to hand, hold Further, to portfolio XX,XXX to that up and accessible of pace of consultation expected returns. over rate our our help about flows. also strong adviser nearly tool that portfolios by quarter, $XX partnerships AUM market trillion XX,XXX it which stood assets

our models enhancements. Here, portfolio analyzes and recommends each team

allowing and greater us of We to recently drive a capacity days, a have improved a further our process increasing efficiency, greatly inflows. our from service reducing times advisers of couple net weeks and of number to review turnaround couple

it efficiency, revenue streams expense management. margin of other expanding achieved quarter our expansion, of strong disciplined top of on by another Speaking was

asset additional previously share. counterparties, been proactive that we've On we've to the streams with revenue transaction-based been and did European capture able our we revenue not side, and

$X double approximate As run-rate-seen Bryan run the quarter's forward roughly each run XXXX and almost the million XXXX Xx going rates. rate to quarter, year and mentioned, earlier sustainable which this is

revenue growth that QX flows We conclusion, pace up on In a and also operating plus an we accelerated This basis and the points revenue it with over from, translates the from expansion scale. in opening for in year-over-year, And Jono. earnings all our from scale XXX margin further disciplined once up our returns we we also quarter turn will is and of margin again see meaningful now margins. expenses combination margin, of basis but showcased shareholders. new incremental XX% come. strong margins to quarter With streams. expansion a our benefits, well-managed a And for years are last into with of expansion opportunity that, function over of to of generating are XX.X%. operating from margin expanding margins points and management, Based up expense I market, XXX growth delivering strong

Jonathan Steinberg

under Today, Thank brief. I be and Jarrett, to hello, you, record assets WisdomTree management. everyone. thrive will with continues

for from on remains once efficiency, over XX% again basis margin the last a strong. share was achieving expanded XX% Momentum and have year, per margins over XXX quarter. XX% operating by up sequentially. points Our Earnings display year-over-year second as

the us of both strives I setting be future. in ETP in XXX for continually forward-looking but, on opportunities of curve. blockchain-enabled much Europe how in employees we accomplishments achieved WisdomTree and are that only tokenization ahead WisdomTree mission, began the with Nearly ago, X worldwide. company our to in As we has thinking and have and opportunities today the also up efforts crypto success the prior reflect strategically only proud both first so our our years and ahead while launched about not bearing finance. those accomplished efficiently I'm and success fruit of

about we when first Although than has than began and process the anticipated, confidence journey. we the greater optimism, opportunity lengthy my today the is longer taken initially regulatory ahead

As pursuing both are and calls, we've we mentioned direct-to-consumer on efforts. prior business-to-business

the broader a XX% On effort, next quarter provide On and when available WisdomTree the newer population, our approaches reward with segment campaigns marketing key us XX U.S. institutional future. learnings, more update Prime, and to to BXB live to side, focus to in of come us expected and is now test in nearly near are to are allowing to Early proven the tighten client live. our in-app go campaigns. our we expect platform allowing states like offers direct-to-consumer marketing we

in early really the institutional campaigns few to share digital platform too and metrics. marketing the next the still launching is in any months, the new early stages asset it With

committed year guidance. early timing begin our you next line are XXXX metrics with sharing of to we with more the However, in

quarters, WisdomTree. to a time in continue it's recent mention I very As for exciting

shareholders. to margin meaningful take Operator, secular of a some to and we Thank management, will expansion please opportunity, call Campbell, under Jeremy assets shifts questions turn over leverage the in you tokenization. from and you. Investor ETFs Head our record Relations, would have retail and our We

Jeremy Campbell

Per management. kick ask and from we a everybody. to Thank good the and questions usual, it will couple over you questions shareholders some guys you, Jono, then of to morning, here take retail to

one So is to you X-year this what first one, the company's Jono, plan. is, I'll direct

Jonathan Steinberg

investments, plus Thank areas global most you, many of position and in try blessed Jeremy. to you blockchain-enabled that, years, or about to the mean, is we ETFs, WisdomTree solutions and in tokenization of prioritization by of a X X always grow it's able compete When that be getting models, grow you're I in right, tomorrow today finance. years asset and out. exciting that out looking And management. the

and did you back years, X right, look our executed. prioritization investments If we of we get

that; this proves also scales. how our model quarter's results proves business well This quarter

that the and of work out fantastic in and proprietary grow blockchain AUM our Europe materially you're continue ago AUM But than continued execution grow expenses. It on today also of current growth grow even into it's team, have Very UCITS together hopefully X X rates. from the So ETFs expand that a AUM. early call in a stellar in against do our as our that usage global research We higher to to much it's our should footprint $X important priority initiatives, looking meaningful in execute X, able a we disciplined of that modern bullish will inflows it's to position in a now, per next will assets working, driving to a we leading us our we alpha our and expansion translate X higher in it and overall UCITS just and greater results our lineup funds. if through footprint drive is very our as are and where continue teams to years. finance. to stability of marketing, sales, And of margins having of years seen X higher It's much we lead today. portfolio And well X against which in or share, continue approach sizable of to It's generally. greater to accelerates strategic lineup, like We're our years need always, are stability years growth. much to we just very we'll be, profitably performance, drive accelerated from continue ETF our nearly that continued the drive what to if franchise last we to AUM. business as to our very, what see billion and that we've do percentage to leadership growth larger line overall yearly that, appreciation earnings grown all AUM all in need a stock our solutions we to AUM, global tokenized

I think Jeremy. that answers the question,

Jeremy Campbell

cut there we'll on Well, Jono. that it Thanks, Great. one.

free analyst community. the feel please up lines the operator, So open to from questions to

Operator

Great.

question-and-answer a will now be We conducting session.

the If question, you telephone a your you. questions. Thank X in will press confirmation queue. Instructions] ask [Operator please question we on for indicate your would please like to moment while is keypad. One poll line

Michael comes Securities. line Our with Northland first from question the Grondahl of

Mike Grondahl

quarter. on nice Congratulations a

about was accessibility to accessible the that? penetration how increasing advisers then is of couple of On a their could the talk models wins? and driver just what of those going. Was advisers XX,XXX And on year-end, secondly, that you

Jonathan Steinberg

Jarrett, why don't you start?

Robert Lilien

Sure.

finger that's wins on the put market additional a of your couple couple on You growing pretty major of much it additional a on accessible platforms.

planned. of anticipated sooner And we them so came we've a of number had wins, but a even couple than

So great news there.

next on on it's got of question platform. model And really with combat you're focus our is every hand-to-hand very Your platform, the a get is a the also the win then two, got X-part organization number and is One, and then and of sort work individual to advisers. you've once really important where of part project. you've to win on part your big the

where advisers focus well X-part quarter that's going pace the quite I each That's new of where early, expected. focus on increased also, of of as bringing Again, are we area is. But in the we say let's majority will that where platforms. now. the on more was that's get an that's continues So focus. that And

sides advisers well. are really We're than both we let's but now our Let's focus going penetrating to start have are models. today, have shifting more access even quicker to the quite

Bryan Edmiston

as add think it's been we've And ever is confident been. about the our I'll penetration. just of as as ever don't that pipeline pipeline strong I

thanks question, the for Mike. So

Robert Lilien

look quick And at XX% the advisers thing. the in it, about that's one When advisers, U.S. other I'd Yes. add XX,XXX you of just

go is country, controls the which of advised of assets. but assets there, still $XX advised the trillion room that X/X in there's to XX% So

a job done of more really the and penetrating market the now we've penetration. focus, again, accessible great So shifts to

Operator

question line of Our Research. Housum the comes next Keith from Northcoast with

Keith Housum

it. Appreciate

than past you XX challenge color that to on ] on froth bit seems commodity it's if like I play. don't want doing outflows something currency fund It It little seen there can trend? perhaps perhaps quarters. what or funds [ a of reverse about Just a But there to little looks you going is for outflows. a bit the the have that broken guys the you like are and know European guys tactical more XX

Jonathan Steinberg

still just ago footprint, just #X and could that the you purpose it knew I'm that It's you and commodities, to of suite European doing of maybe in. integrating other the costs cutting at all than X becoming gold from diversify it's really and broad smaller. been got and Jarrett, then start acquisition that extraordinary When of post away we going it's that our overweight years Securities commodities jump and it. than we've would much the was look and that just with to an ETF our rest revenue -- larger acquisition

have there So Jarrett, like the if you'd on that's insights all you're it. is that Jarrett I more that you to unmute. add.

Robert Lilien

on in going of clients are see when Yes, you commodity nature really that's up, commodities the the Jono down, nature. way Jono. Thanks, But into the clients Yes. generally it. of are on invest into people when that was just prices sort X that tactical them. the and things. is pricing suite first It of And are that, tactical that coming use mentioned sort and buying selling piling mute. And

part So of that the is the of nature suite. large a

And nearly prepared part of on then side. the talked was the we at what other to look big finally, about $X a comments in been separate today. ago it focus We already several also of have from UCITS the for business, area from X Jono to that, us at look mentioned, which that's as and revenue billion an years you if is that, grew

contributor and fantastically is overall you Europe of that to healthy. high So results our the put actually, is going is broken, together, well. all it's the opposite overall, overall very revenue And a actually capture

Keith Housum

is Great. can for to modeling. And that If great that. the other quarter. the question investors going follow-up actually I switch income gears a know back surprise one I and appreciate

making you advisers. guys guys are You an Is are Or How opportunity where Europe working great the also is the road? now with down progress the U.S. at well? about with in Europe? right as that

Jonathan Steinberg

Jarrett?

Robert Lilien

quarter, Europe partner. is again, yes, models little And up. now the in nature a opportunity And the opportunity over platform Yes, of, in internationally, models. here. It Yes. is of frontier just is different, is that we're us looking quick an little it's market for at. we more little different a an actually advisers. a where And terms And that's But we're example a first that nonetheless, providing announced fragmented, The things it X opportunity. our on more in an deal the a there. servicing there it's and on part the of next is of

Operator

question next Sutton from the of Craig Our Hallum. comes George with line

George Sutton

Logan of question George. Nashville on actually Conference He relative right off at now. was kind to models. the And piggybacking for the was asked down that then in Bitcoin first that

their One we've taking of of things from be the ETFs could kind Bitcoin that the shops making out? way been kind into, the that their X that their mega that are playing or conference into same I'm those of some away kind way you is of feeling making models guys see if be that could just of in how you wondering the next months. demand

Jonathan Steinberg

to touch want you would that? on Jeremy,

Jeremy Schwartz

Sure. Jeremy Global this Schwartz, Yes, CIO. is our

suite we of plus launch We models. first have perhaps crypto run, a been were actually and

we from bonds an a XX-XX and it a that launched some with did we running funded and where the we have Bitcoin, things we XX-XX to where it were did risk. attractive, allocation thought perspective, so model models it, from that more when X% we been from XX-XX then stocks point, at funding we first bonds did we less it we've like so And and

managing allocations our our called that Bitcoin risk it have been in model So think we model aware suite. have launched we another about We'll these. it model, have we full had of some in, We've from we've those. recently geopolitical where to

sort some in of including a leadership in So portfolios already these already. I'd say way of already model our we're

George Sutton

slowly a just guys that it. And something and point offering talked one I that? marketing Appreciate really of pick prime other. start it. kind kind you to spend you've trigger of at there. ramping up? there the the there which Is about Is know that Got would

Jonathan Steinberg

you do want to Will, start?

William Peck

coverage, Digital the missing Will it's I map, continue mean of to Peck, Texas. in state full Yes, think Head Assets. there's Yes. we hey, at you stake if get as a look I big

that coverage feature of expand marketing continue kind continuing product I in And offering to results that Like acquisition, do that plan, manage we we in So state and remarks, the seeing growth. declining actually just WisdomTree accelerating get continue prepared we'll full to of have cost increase so to customer think way. spend. the full far, to we're it's we continuing it great all open account mentioned to

lead to So there. continuing in growth into that and

Operator

Thank you.

Morgan line Stanley. Our next the Cyprys question comes from Michael of with

Michael Cyprys

Anna for Lee Mike. This is on

looking strategic Just or inorganic opportunities, how much a curious through it What guys or whether your acquisition And you an be JV. view or partnership at? you here? on are growth spending are time

Jonathan Steinberg

platforms. start. that to look we opportunistic. be the made as acquisitions like M&A, a say very will out I'll us we did very, the launch made X Europe our I facilitate selective, We've at but always asset digital out to through to base. help what investments -- of build to things. lot a it's We build trying whether We're We're of

it's think that say would but I opportunities, I there So primary. are

think we for high growth, a and I have for is us, organic hurdle very primary M&A. our

actually we if been have not through so accomplish ourselves to highly can strategically acquisitions easy to a find better. Our position accretive, acquisitions. But really way

long we do pump out a we is take that want of we we strengthen the -- to that always know think where look to and sort position. You going

the question. you anything, Is that want So Jarrett, I add? might to there think answers

Bryan Edmiston

Jono, it's Bryan.

the in past. that I we've very the think point thing just would been out, recent episodic other I

you years well back of Gold shares over as we a highly previously royalty past down of for obligation and that debt. gold World our course bought stock we the terms. favorable the bought on back that issued from accretive transaction buying ago, Council few year out some had been preferred the we've We If paying just recall, us. And

you relates want through to this just just the to but you on think we that. management priorities not as it's if -- front, don't on capital sight as acquisition well, the it So lose

Jonathan Steinberg

for thanks point Great that. adding Bryan,

Michael Cyprys

Perfect. areas the And about most talk a of and follow-up. you update where creation an on then focus guys kind Could your opportunity? of product us and new see maybe just give maybe you key

Jonathan Steinberg

you you that? could secrets obviously, give But you talk would Jeremy. take -- away, only take about Jeremy, can't it your please but

Jeremy Campbell

say diversify we've on exposures product very I'd set. to Yes, been focused core continue and the

business as I think and we in level, the high diversified growth. in Europe. when as the we've and been value market. U.S. look quality dividend all focused you U.S., as major the focused are now we've We within a growth, very But we're at quality WisdomTree it franchise value waiting with but holistically for off started rotation increasingly the quality on also been

in but cap after get global at Europe end that the U.S. big to quality CDRW in that billion. launched launched launched the to further XXXX the tech. small That We U.S. right the $X.X we funds and the versions synergies, bear at we So marketing up of of now mid almost in

So sort is of product part strong to We've the diversified a We to continue out product to exposure. launch of Europe, and of of a as growth well. And collection as products. a trying flows rounding of franchise lot themes. thematics have All that very get on interesting continue that been focused we suite. in megatrend launched products

to core family alternatives. U.S. that We the efficient so lot And things doing our room I for give we're in like think did a in

that have efficient but in over core with our gold also the this U.S., U.S. overlays Europe. core then year products of performing in efficient launched markets been for the in they Some

that continue think concept. we're overall to the execute try going mix we that I diversify But to we'll more have. yes, and do with product to

Jonathan Steinberg

XX grow the was out just funds. set. started But and actually billion, suite firm, funds our of $XX our a more really, is our billion $XX strengthen much quite years product it to funds. broad ago, focus to we looking of fill strategically we always Since had We're to

can suite, do we more lot in and existing it. lot the a think potential with I we of a have

Operator

question next with Kotowski Oppenheimer. Christoph Our comes from

Christoph Kotowski

if Most the dollars? I'm if mine asked, I And Are P-times-Q margins. I pure little but And Or is of like that XXX% these AUM? always just wondering incremental? revenue? then been an pure margin just if that you was with grow to and revenues, grows? European flush XX% on like curious have like more, a it it out guiding trying could incremental bit grow? every Or with generally you're incremental that item grow to does what over model And time, XX% is does as analyst, line it it does other

Jonathan Steinberg

question. Great Chris.

Bryan Edmiston

I'll that Yes, take question.

relates it And other elements different asset-based think rate, of elements a as there's I couple to certainly there's just transaction-based through So run revenue. going elements. a there and is mix of

were run how time this I that think is said only the to I of we isn't be want the little plans largely very I we when say comes to revenue. compensation, much see the when in at rate model asset of remarks, on $X may there AUM bit prepared So time, is could about thinking base side, -based. forward a in an if are that grow, million uplift other to the assume offset. I a don't it to place for thing comp going really being. It the to our is expense performance fair this necessarily an mean

So if than But of with well. a mean incremental associated bit the revenue much clearly that the other about when that incremental as revenue. there's bit of it there's might more XX% a a impact margin little thinking comp little healthier

Christoph Kotowski

for me. it That's Great. Okay.

Operator

at I'd closing the to Jonathan Steinberg back turn are Thank this questions time. further you. for comments. to over floor like no There

Jonathan Steinberg

Friday Enjoy the Thank you, everybody. We your next appreciate beautiful your time you in and summer. speak your Bye, support. to quarter. We'll everybody.

Operator

today's concludes This teleconference.

you for at lines time. Thank this your disconnect may You participation. your

WisdomTree (WT) 26 Jul 242024 Q2 Earnings call transcript